Why No Billion-Dollar Open Source Companies? 487
Glyn Moody writes "If open source is such a success, why aren't there any billion-dollar turnover open source companies? A recent briefing by Red Hat's CEO, Jim Whitehurst, to a group of journalists may provide an answer. Asked why Red Hat wasn't yet a $5 billion company, as he suggested it would be one day, he said getting Red Hat to $5 billion meant 'replacing $50 billion of revenue' currently enjoyed by traditional computer companies. If, as is likely, that's generally true for open source companies, it means they will need to displace around $10 billion of proprietary business in order to achieve a billion-dollar turnover. Few are likely to do that. Perhaps it's time for managers of open source startups to stop chasing the billion-dollar dream. If they don't, they will set unrealistic ambitions for themselves, disappoint their investors, and allow opponents of free software to paint one of its defining successes — saving money — as a failure."
Pftt (Score:5, Insightful)
they will [..] paint one of its defining successes — saving money — as a failure.
Hmm.. so they're bringing in 10% of the revenue of non open source equivalents - basically meaning that their clients need to spend 90% less.. how is that not saving money?
Re:Pftt (Score:5, Insightful)
Re:Pftt (Score:5, Insightful)
And the advantage of this is that customers who call with a problem actually get a useful answer. They're paying for that support, rather than for the license.
Re: (Score:2, Interesting)
Posting Anonymously for the obvious reasons... And we continue paying due to the *quality* of the support. The (mumble) millions paid annually to Redhat and Covalent is nothing compared to the (mumble mumble) millions paid to the other top ten largest software companies. It's not a fair comparison as the product categories are different, but the support from Redhat and Covalent is good and sometimes great, the support from the big guys is sometimes good and regularly worse than nothing because they waste ou
Re:Pftt (Score:5, Insightful)
>>>the software is free, and the company pays for support.
What if I don't need support? That's why Red Hat and other liberated software companies will probably never see 1 billion. Bottom Line: A lot of us are cheapasses. ;-)
Re:Pftt (Score:4, Insightful)
to make matters worse, your customers are predisposed to being the kind of person who will roll up their sleeves and support the product themselves.
to use a car analogy, it's like red hat is giving away cars hoping to make money on service, but the car comes with a shop and all the tools needed to do anything to it, and all your customers are mechanics.
i'm surprised they can make any money at all. RedHat should
Re:Pftt (Score:5, Informative)
Very large companies need to have a disaster recovery plan in place, and contacts to call when downtime is costing money. Especially outsourcing or service providers. If you run linux in this environment, "my team knows linux" is not going to cut it. You want to be able to place the blame on the "vendor" as opposed to being responsible yourself. So you don't modify the code, and you buy the support package.
Red Hat should be very profitable, given that, except Microsoft makes sweetheart deals with the big companies to keep them using microsoft tools. I have a full MSDN subscription, which would cost me piles of money but most likely costs my employer very little per head. I can download and use and develop with anything I want, for free. It only costs money because the production servers have to be fully licensed and legit.
Microsoft is everywhere, so they can afford to give away freebies, charge for just the production installs, and still make boatloads of cash. If you take a look at the revenue compared to actual software usage, I wouldn't be surprised to find that Microsoft is giving away as much or more software than Red Hat. Direct end-user sales are just the icing on the cake - someone paying full price for Windows is very rare, it's usually OEM cost, which is approximately 10% of the cost. So Red Hat's numbers are probably not far off Microsoft's numbers, it's just reported as software sales vs. support costs. And even that difference is a technicality - Microsoft still charges for support depending on what you need and where you got the software.
Fundamentally, it's the same business model. Give lots of software away and make up for the sales losses with support charges - but with OEMs in the middle it's not transparent to the end users. Only the businesses see how the model truly works.
Re: (Score:3, Insightful)
I have a full MSDN subscription, which would cost me piles of money but most likely costs my employer very little per head. I can download and use and develop with anything I want, for free. It only costs money because the production servers have to be fully licensed and legit.
Very insightful.
Just a reflection though; under Ubuntu, "I can download and use and develop with anything I want, for free.", except the CentOS production server software is also free.
The main holdout for Microsoft I think is still market inertia. Noone got fired for buying Microsoft. (Except perhaps the guys behind London Stock Exchange).
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Very large companies need to have a disaster recovery plan in place, and contacts to call when downtime is costing money. Especially outsourcing or service providers.
So far, so good.
If you run linux in this environment, "my team knows linux" is not going to cut it.
"My team knows Windows" is not going to cut it either.
You want to be able to place the blame on the "vendor" as opposed to being responsible yourself.
Wrong. You need to solve the problem. If you trust the vendors more than you trust yourself, go directly to fail. Even under ideal circumstances the "blame the vendor" excuse only works for about 15 seconds. Your employer does not view the vendor as the "last line of defense" -- you are. In the event of catastrophic meltdown, the vendor will probably survive (regardless of fault). Will you?
So you don't modify the code, and you buy the support package.
I wouldn't go rolling my own version of Op
Re: (Score:3, Interesting)
So there is less of an incentive to produce easy to use and bug free software? My company doesn't pay support for many of the programs we use. They just work and do what we need them to do.
Honestly this is a problem for FOSS development. In the long run I have to wonder if FOSS OSs only real chance in the consumer market is through hardware makers. By not having to pay for an OS and be dependent on an OS maker they can increase profits and control.
In the end I feel that there will always be both closed s
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Actually, there is, it is just not as clear as you might expect. If a large company has to choose between retraining costs for a system that is not easy to use but which carries a much lower up front cost, versus not retraining and sticking with their proprietary system, they are probably going to save a lot of money sticking with the proprietary system. If an open source company cannot produce software that requires minima
Re:Pftt (Score:4, Insightful)
because we all know that closed source programs require zero administration time.
Re:Pftt (Score:4, Insightful)
you're right, that's not what it means. It's a completely meaningless meme that gets tossed around every time there's an article about open source.
Re: (Score:3, Informative)
meme /mim/ Show Spelled[meem] Show IPA
–noun
a cultural item that is transmitted by repetition in a manner analogous to the biological transmission of genes.
I think it means exactly what I think it means.
Re:Pftt (Score:4, Interesting)
I think you'll find the same thing is happening in the Media industry. People's ability to download movies, songs, books for free is devaluing the time and wages of the creators. The media companies won't completely disappear - they'll just earn 10-20% as much money as they did before 1999.
It appears to me the software industry is heading along the same path, and just like the RIAA, Microsoft is fighting it tooth-and-nail because they don't want to see their income reduced.
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Apple is a company that USES SOME open source software, yet keeps the most important bits hidden in secrecy, and the vast majority of their products are 100% closed source. IBM would be a better analog, although most of their products are closed source as well.
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Actually, the vast majority of their products are some combination of open and closed source. Their operating system kernel is completely open source, as is the core of their browser (which has since become the core of a large number of other browsers) and JavaScript engine. Their WebDAV and CalDAV implementations are rather nice and they've open-sourced those. They contribute quite a lot to LLVM and created clang as a front-end to it, thus giving the open source community a choice besides the gcc toolch
Re:Pftt (Score:5, Insightful)
Open Source is only 90% cheaper if your time is worth 10%.
Best joke ever.
If I had to rate difficulty of OS maintenance and setup, it would be:
Microsoft (Any), Most difficult
Solaris
Mac OS X
Linux (Any except gentoo), easiest
Re: (Score:3, Funny)
Why do you rate Windows the worst and Linux the best? What makes Windows so horrible to maintain? All you have to do is pop-in a CD and install. After that the system usually has everything the user needs (web browser, Microsoft Office, etc).
And what makes Linux so easy? In my experience it's a pain in the ass - for example my Linux laptop refuses to execute flash websites (like disney.com or tv.com). And I can't get it to talk to my Netscape ISP.
Re:Pftt (Score:5, Insightful)
All you have to do is pop-in a CD and install. After that the system usually has everything the user needs (web browser, Microsoft Office, etc).
I don't know where you're getting your Windows CD's but I've never seen one that came with a preinstalled copy of Office. However, practically every copy of Linux comes with OpenOffice.org.
my Linux laptop refuses to execute flash websites (like disney.com or tv.com)
Which Linux? Which Browser? I've never seen Ubuntu fail to install and run Flash and version 6 of the Chrome Browser comes with Flash nowadays.
And I can't get it to talk to my Netscape ISP.
I can't get Windows 7 to talk to my scanner. I'll talk to my scanner manufacturer and you talk to your ISP.
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"Linux" is not a single operating system (Score:4, Insightful)
I think that you might have been joking, at least judging by what you said about Windows installation. In all seriousness though, the sooner people stop treating "Linux" as if it were a single operating system, and the sooner they stop expecting everything they want to be installed by default (which is not the case with any other operating system -- so why should a Linux distribution be any different? Yes, you need to install the Flash plugin separately after installing Windows!), the sooner we can get back to having "productive" conversations about the relative merits of different operating systems.
Individual distros are commercially insignificant (Score:4, Insightful)
People need to stop saying "Linux" as if it were one operating system.
Debian, Ubuntu, Fedora, Mandriva, SUSE, etc. individually will never become popular enough to attract developers of certain kinds of software for which free software has been shown not to make business sense, such as games and game-capable 3D video card drivers. The only way to make a market for non-free programs that run on Linux is to have a single ABI for user space. Linux Standards Base was supposed to ensure that.
You say you cannot get Flash to work? Which distribution are you using?
The fact that you feel the need to ask that question illustrates the problem. Should a program require different binaries for Windows Starter vs. Home Basic vs. Home Premium vs. Professional vs. Ultimate vs. Server?
Which architecture?
There are only two architectures left for consumer products: x86 and ARM. Given "laptop" as opposed to "smartbook", I'll take an educated guess of x86.
Re: (Score:3, Interesting)
Those are the same OS with different add-on bundles.
As are Debian and Ubuntu and Easy Peasy and Mepis and Super OS. So how can the publisher of a Linux distribution make it worthwhile for companies to develop and market products specific to that distribution?
Re:Pftt (Score:4, Informative)
All you have to do is pop-in a CD and install.
Followed by a few hours of search for the newest drivers and another few hours of search for the apps you want to use and another few hours to get all your games patched up to the current revision. Getting Windows to work from scratch takes ages, especially when you use anything that a is a bit non-mainstream.
Now given, Linux avoids the game patching problem mostly by not having games, but getting all the apps you want to run is a hell of a lot easier when you can just do "apt-get install " instead of googling around.
Re: (Score:3, Informative)
Windows is difficult to install? Do you drag your knuckles along the ground too? Its the only one on that list that actually goes out to a 3rd party driver repository to find drivers for my computer to make things work properly. Failing that it pops up notifications with links where I can get device drivers for my scanner or webcam or whatever.
Sorry but there are Linux installers out there still that don't work on my display adapter (Ubuntu on my Shuttle PC - works on the VGA port, but not the HDMI port...)
Re: (Score:3, Interesting)
In my office we have Windows, Mac, and Linux machines. Pretty much evenly split between the OSes. We hired a support person for Windows. So in this case, Windows is both more expensive and requires more support.
I don't know where you get your numbers.
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That maybe used to be the case, but I've been using Ubuntu for almost everything the last couple of years, and it's a very hassle free system.
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People are idiots. It's not a conspiracy. I suggested moving a couple of people to Linux/OpenOffice recently and even the one other UT guy here said no, without even an explanation of why not and I couldn't be bothered to press it at that point in time. I think his main reasoning is probably because he'd be the one having to help them out if something went wrong. He's happy to use Windows 7 and iOS but when it comes to Linux, he hasn't even tried it out yet.
I've been using it to do my work here for the last
Government collusion (Score:3, Insightful)
Re: (Score:2)
Exactly: it's not a bug, it's a feature. It means a healthier market were everyone can compete fairly.
Re:Government collusion (Score:4, Insightful)
Competition is thriving in the open-source market, hence the lack of massive market-cap non-specialised companies. FOSS is showing capitalism how it's done.
Uh... No (Score:4, Insightful)
Competition is thriving in the open-source market, hence the lack of massive market-cap non-specialised companies. FOSS is showing capitalism how it's done.
I'm a huge supporter of both capitalism and the open source movement, but please, lets not pretend that the latter has much to do with the former. The reason why open source doesn't make much money is because it's essentially a volunteer effort. The vast majority of people that do FOSS work do it unpaid, and on their own time. I've yet to find a stockbroker that works for "the love of the game". Capitalists are in it for the money, first, last, and always. The open source movement is basically a bunch of voluntary communes. If they make some money, hey, that's nice, but the software is what's important to them, and they're willing to work for free to see it happen.
The two ideas have little to nothing in common, save the idea of voluntary participation.
Re: (Score:3, Interesting)
I disagree. I would argue that FOSS is the pinnacle of free market capitalism.
In a free market, price is dictated by supply and demand. With software, supply is effectively infinite, so the price should trend towards zero. Only by introducing artificial barriers are companies able to profit by selling software. If you assume that the costs of development can be covered without charging for software (which FOSS demonstrates to be the case) the per-unit price of software should fall to zero in a free market.
A
Um, IBM, Intel, Xerox (Score:5, Insightful)
Re:Um, IBM, Intel, Xerox (Score:4, Insightful)
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Actually, IBM pretty much did. It wasn't until the late 1970s that they started copyrighting their code and restricting distribution of the source.
Re: (Score:3, Informative)
i wonder tho, until the 1970s, could anyone build a IBM compatible product without being lawyer stomped?
no need to worry about copyright, if the only hardware it can run on is a IBM.
Re: (Score:2)
The article is talking about companies that are exclusively open source. IBM, Intel and Xerox are all involved in open source products, but all of them make three of them make their money selling proprietary, closed source hardware.
Re: (Score:2, Insightful)
Okay, well, in that case there aren't any companies that are exclusively open source. Even Red Hat itself sells closed-source products. Canonical has the closed-source Ubuntu single-sign on service [kabatology.com]. You can't have a billion-dollar open source-only company if there aren't any op
Re: (Score:3, Informative)
Every company your talking about seems to have another business, hardware or otherwise which they derive profits from. Yes, IBM sells services for open source, they also have a HUGE mainframe business and.... actually... nope, I can't think of one industry they don't have a foot in from some angle. Intel is involved with open source, but then again, their biggest money spinner is x86 chips. Xerox makes photocopiers and printers.
Re: (Score:3, Interesting)
Why not? There is enough government contracts and other stuff all over the world. You would end up being the size of MS to do it, but given enough time, it's plausible. As long as you don't screw up majorly and keep most of your customers happy, there is no reason why this couldn't happen.
It's the term Open Source Company (Score:2)
Huh? (Score:5, Insightful)
Why no building dollar bicycle-pump manufacturers? Why no billion-dollar indie record labels? Why no billion-dollar oil companies that have not polluted? Why are there no billion-dollar hockey franchises?
Asking why there are no "billion-dollar" open source companies is kind of stupid. Considering how much of the very fabric of the Internet and the web are open source, I'd suggest that if "open source" disappeared tomorrow, a lot of "billion-dollar" companies wouldn't be worth anywhere near a billion dollars.
This story is the Slashdot equivalent of "If you're so smart, why ain't you rich?"
Re:Huh? (Score:4, Insightful)
Asking why there are no "billion-dollar" open source companies is kind of stupid.
That's kinda my reaction too.
Why does success need to only be defined as "more profitier every quarter... to infinity".
Small and medium sized businesses are, and always have been, the core of every economy. They are where the creativity is. That's where most jobs are. They are more agile and able to react.
Those few billion dollar companies are almost always bureaucratic, bloated, predatory bullies, who ultimately cause more damage to the economic environment then any good they ever did. (see "big energy", "big pharma", "too big to fail", etc)
Re: (Score:2)
I think the point of the article is not to decry the lack of billion dollar Open Source companies, but rather to point out to Open Source companies that they are unlikely to ever be billion dollar companies. So stop trying to be, do what you do, do it well, and carve out your niche. Companies can kill themselves by aiming too high, as well as by aiming too low. Do your research, figure out exactly what you'll need to ship for a billion dollars in revenue. Is it realistic to expect to ship that? No? Wh
They get bought out (Score:5, Informative)
A quick search on the Internet revealed that a lot of them get bought out.
http://royal.pingdom.com/2008/02/06/the-seven-largest-open-source-deals/ [pingdom.com]
Sun buys MySQL, $1 billion, 2008
Sun now has their hands on the world’s most widely used open source database.
Red Hat buys Cygnus Solutions, $675 million, 1999
Red Hat started the open source acquisition race early when they bought Cygnus Solutions, providers of open source software support.
Citrix buys XenSource, $500 million, 2007
Considering how hot virtualization is right now, we can see why Citrix bought XenSource, the company behind the Xen virtualization software.
Yahoo buys Zimbra, $350 million, 2007
Yahoo already have their own email services, and with Zimbra they got an integrated email, messaging and collaboration software.
Red Hat buys JBoss, $350 million, 2006
Red Hat strengthened their SOA offerings by buying the JBoss Java application server.
Novell buys SUSE, $210 million, 2003
Novell got their own Linux distribution by buying SUSE.
Nokia buys Trolltech, $153 million, 2008
Trolltech is the company behind the Qt GUI framework which is used by the popular Linux desktop environment KDE.
You make more money using open source than selling (Score:5, Interesting)
Just ask Google.
Why should your profits go to Adobe, Microsoft, IBM, Oracle and all those other closed source companies? Look at the .com companies that survived the 'dot bomb' era. They used open source.
Using expensive proprietary solutions is a sure way to increase your expenses and decrease your profits.
How do you become an open source billionaire? Ask Sergey Brin and Larry Page.
Re: (Score:3, Insightful)
How do you become an open source billionaire? Ask Sergey Brin and Larry Page.
You mean create a hugely successful proprietary search engine and ads platform? Sure they may have leveraged open source in creating these proprietary products but they didn't make their money through selling open source products.
Because of the Concept of Intellectual Property (Score:5, Insightful)
Anyway, if copyright laws didn't exist for software? Well, you'd see companies like Microsoft fall apart and companies like Red Hat thrive. Because the business model would shift from protecting your source code through litigation to making it available for free since that would be the only way to effectively combat piracy. Right now, the system is so screwed up that even when the original Windows becomes public domain, no one is going to have the source code and if they do they're not going to release it. I almost wish the Library of Congress kept a proprietary source library if that didn't leave to government abuse and a multitude of problems with huge security concerns.
As a young idealist, I once thought that open source should be welcomed by all since there's an infinite amount of code that the populations will always need written. If they don't need an operating system, they need a web server. If they don't need web server software, they'll need the specific application on a per company basis. Ad infinitum. And therefore you shouldn't fight open source when you're generating revenue from such a general purpose and widely used tool. Unfortunately I came to understand copyright, marketing and how Microsoft keeps making bank on Windows despite it being -- in my opinion -- an inferior product. And so my logic was inherently flawed--especially in the eyes of stockholders and lawmakers. Such skewing of profits between open and closed source companies reveal this.
Re: (Score:2)
"Anyway, if copyright laws didn't exist for software? Well, you'd see companies like Microsoft fall apart and companies like Red Hat thrive. Because the business model would shift from protecting your source code through litigation to making it available for free since that would be the only way to effectively combat piracy."
You really don't understand what copyright is, do you? Copyright is a legal framework that defines how creators and distributors interact with one another. All that stuff about file s
Re: (Score:2)
it's a lot more profitable to copy somebody's code, make it your own, and slap a bunch of protection on it to prevent somebody else using it than it is to share it
Because protecting your code and preventing anyone else from ever seeing and using it works perfectly right?
There's a reason he's modded up and you're not.
Other big recent players in the software market? (Score:2)
Normally you might compare one business model with another on a somewhat equal basis. When comparing open source to closed source, doesn't it make more sense to compare the performance of the open source software company with that of the close source software company that started around the same time?
So can anyone name any large close source software companies that have started up rather recently that are billion dollar companies? I can't personally think of any. Can anyone else?
False Premise (Score:3, Insightful)
Perhaps it's time for managers of open source startups to stop chasing the billion-dollar dream.
I love it when authors use a false premise to setup their stories. Of course every one wants to make it big but the idea that there is some mythical number that every open source CFO is reaching for is just stupid.
Further if they want to look for a company that uses the FOSS model and has billions: http://www.google.com/finance?q=NYSE%3AIBM [google.com]
Margins... (Score:4, Insightful)
The issue is that proprietary software allows ridiculous profit margins (close to 100% since the software costs nothing to distribute and economies of scale are pretty much linear since the upfront costs remain the same regardless of volume)... Now no industry could possibly achieve such margins if there is any competition, so proprietary vendors stifle competition through lock-in..
Open source vendors are unable to rip their customers off by selling zero cost goods at ridiculous markups because if they did someone else could come along and offer the same code for a cheaper price, instead they must make their money selling services... Services have a constant ongoing cost to actually provide the service, and these costs increase as you provide service to more customers.
The proprietary software market is effectively a scam, which sooner or later will come to an end... Customers will wake up and realise just how badly they're being ripped off, but until then the fraudsters will make as much as they can out of it.
The services market on the other hand is far more reasonable and although competition may eventually result in consolidation and razor thin margins, there is a lower limit.
yeah... (Score:2)
...my response to this is "Why should I care?" The very purpose and idea behind open-source flies in the face of profits. That's not to say these companies shouldn't be trying to make money, but the purpose behind open-source is to spread knowledge and capability...not to acquire wealth.
"It's in the fucking charter."
Look what happens when you value them up (Score:2)
We gave VA Linux their shot... And look what happened. I'm not going to point blame but Eric S Raymond did happen to issue the most epic "who would have thought" letter to the world proclaiming how gifted he was, shortly before his share of the company dropped in value from some $40 Million to about $4 Million (and falling).
Open source simply isn't about the money, after all. Try to muddle it up with dollars and cents, and you will end up with Windows.
Ask the opposite and get the same answer (Score:5, Insightful)
Try asking why are there no billion-dollar companies using 100% CLOSED source software?
The answer is simply because billion dollar companies dabble in a bit of everything. Oracle has a lot of open source products. It also has a lot of closed source products. Same with IBM, Microsoft, Google, Apple, etc etc. If you don't consider these billion dollar companies to be open source companies then you can't consider them to be a closed source companies either. They all dabble in a bit of both because they are all really big.
Because $Bn's means exploitation (Score:3, Interesting)
Once you get into the $Bns you become responsible for causing suffering, hardship, using litigation and loopholes, throwing your weight around, metaphorically "knifing" people in the back and being a nasty PoS. By then any of the attributes that attracted you to Open Source have withered and died.
Because it's about cooperation.... (Score:2)
There may not be any "billion dollar companies" but open source allows small companies to play the big leagues. No one can play with MS - they're too big, too powerful, and too locked up. But open source allows a small firm with a single developer to put out a "best of breed" linux based widget - because that developer can leverage the work of hundreds of thousands of developers.
So while our closed source competitors built stuff that looked like it was stuck in the 80s - 300 baud modems for communication?
Easy (Score:2)
Easy. Because money is not the only measure of value and success. WTF is wrong with you people?
Re: (Score:2)
It's not ME. It's the mortgage company, the jet-rental company (travel without flying commercial is an indicator of success), the electronics companies (geek toys are indicators of success), the escort companies (being seen with attractive women is an indicator of success), the jewelry companies (another way of keeping attractive women around), the car companies, the book companies (a good personal library is a m
That's a crock (Score:2)
"getting Red Hat to $5 billion meant 'replacing $50 billion of revenue'"
Cow manure. Red Hat isn't one tenth the cost of proprietary software, not even close.
The real problems are:
1. It's hard to scale services.
2. You have to have the demand for the services.
3. In nearly all cases, proprietary solutions have first mover advantages.
IBM HP where are they now (Score:2)
http://www.cioupdate.com/news/article.php/1574431/Can-You-Make-Money-Selling-Linux--Try-35-Billion.htm
In 2002 HP claimed $2B in Linux revenue and IBM claimed $1.5B. I would expect that has ramped up considerably since then. I can't seem to find recent numbers perhaps they are embarrassed by the riches.
On the server hardware side, sales are booming. You have to think there are service contracts with those.
http://news.cnet.com/2100-1001-984010.html
The Reality of Open Source... (Score:2)
Knowing the price of everything (Score:2)
- and the value of nothing.
If open source is such a success, why aren't there any billion-dollar turnover open source companies?
It is not a question of if - open source is a resounding success; just look at how the GNU project has become the defining standard for much of UNIX, to the extent that companies like IBM, HP etc offer the GNU toolset on their proprietary systems. And GNU is only one part of open source - GNOME and KDE are other prime examples. And of course, there is Linux; need I say more?
Money isn't everything; it is certainly not the best measure of success.
Answer is simple (Score:2)
Because They're Not Monopolies (Score:2)
The whole point of open source is sharing the assets. Which doesn't mean "free" (except when it's FOSS).
Red Hat isn't the only Linux corp, the way that Apple is the only Mac corp and Microsoft is the only Windows corp. Add together all the Linux OS corps, including the biggest, Red Hat, and you've got something that's bigger than, say, Sun (was), or any of the Unix corps before it.
Linux's open source means that the corporate model is different, fundamentally. The model doesn't capture every penny in a singl
Sales and relationships and the IBM factor (Score:2, Insightful)
A few things that many geeks seem to not get:
Salesmen make the world go 'round. They are pounding the pavement every day. They are making relationships with CIOs every day. They have convinced those CIOs that the low-risk path is to buy name brand stuff. It's proven. Plus, if there's a disaster, the CIO can tell his board he bought the best stuff. That's the old IBM line: you never get fired for buying IBM.
CIOs and other management types like the whole sales process. They like the kind of people th
Does BP count? (Score:2)
Hmm, I wonder (Score:2, Insightful)
Gee, I wonder how companies who give away software for free and whose software is largely maintained by the user community could ever make less money than the companies that lock their software down and charge hundreds of dollars per copy?
It's almost like people aren't paying for it!
Most "duh" article I have ever seen on /.
FOSS predictions vs. actual outcomes (Score:3, Insightful)
There are a few distinct concepts which have been conflated:
- The size of the Open Source software market as measure in dollar revenues.
- The total number of Open Source software deployments.
- The value of Open Source software to its users, as measure in revenues of its users (e.g. Google)
- The size of the largest corporation operating in the Open Source software market.
The assumption that with Open Source software those measures would be in the same relation as with closed-source software markets is probably incorrect. In particular, using the sizes of the largest corporations as a proxy for the "success" of Open Source software is bogus. The Open Source Software business might tend to fragment into multiple vendors because the license permits that, whereas in the closed source market services cohere around large corporations, the software copyright holders.
The failure of predication here was not to overestimate the success of Open Source software. It has been a wild success. Rather, the failure was to to predict the specific forms which that success would take, which Open Source business models would succeed and particularly which corporations would be winners and which losers. Some predicted that companies which rigidly devoted themselves to vending purely Open Source solutions would prosper the most. That prediction has proven incorrect. The actual outcome seems to be the Open Source adoption is broad but the biggest winners are not strict adherents to the ideology. Significantly, Google, current market cap. 154.65B, runs on Linux. Apple is thriving and its machines run the Open Source Darwin in combination with proprietary layers on top. IBM provides Linux on its servers.
Conclusion: Open Source software is a muti-billion dollar business but the winners in that market were not the Open Source purists.
Comment removed (Score:3, Informative)
Open Source Solves the Broken Window Fallacy (Score:3, Insightful)
Open source solves the broken window fallacy in the software market. Seriously. Does anyone believe that Bill Gates or Steve Jobs are ridiculously rich because their companies' software is that much better? That they really earned all the money they have? Linux and other OSS has saved the world probably on the order of trillions of USD which has been put to other uses (curing cancer, researching alternative energy, feeding the poor, etc, etc). On top of that, it has made it possible for people who could never afford the outrageous prices of Microsoft or Apple to be able to use a computer.
Coding Horror already answered the question of this article over three years ago [codinghorror.com]:
Re:What about Google? (Score:5, Insightful)
You mean the same multiple open-source side projects that add little to nothing to their bottom line? Google gets it's money from it's proprietary search engine and ad platform.
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So? That's just showing how they are using the Open Source Software to help their main source of income. The point is to give away the abundant and infinite goods (How many copies of Google Chrome can you give away? About as many computers are there are in the world).
But how many ad spots can you sell to the specific people that want to sell to the specific people that want to buy? That is VERY SCARCE. Google has found a very valuable yet scarce resource, and uses the very valuable but abundant software to
Re:What about Google? (Score:5, Insightful)
So what? This article wasn't about multi-billion dollar companies leveraging open source for their bottom line. It was about companies selling and supporting open source products that they create.
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You mean all running on an internal, proprietary fork of GNU/Linux, right?
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Re:What about Google? (Score:5, Insightful)
Neither. I'm merely pointing out the facts which are that the Linux kernel they use is an internal, proprietary fork, their GoogleFS is proprietary, and the version of Ubuntu they use is an internal and proprietary fork. Why would it make me a troll to make sure that the entire story is heard?
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Re:What about Google? (Score:4, Insightful)
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That's great and all but it doesn't change the fact that Google's actual business is in it's proprietary search engine and ads platform. They'd ditch their open source projects long before they'd over ditch those core business.
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Re:What about Google? (Score:4, Informative)
Says the man with a sig linking to a scammy late-night informercial style site.
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A relentless focus on profit over all else is the scourge of capitalism in our nation. We have forgotten that business exists to serve people, people do not exist for the sake of money. There are other business models other than focusing purely on profit. For example, ask Muhammad Yunus: 2006 Nobel Peace Prize Winner; Founder, Grameen Bank [youtube.com].
From the Grameen Bank FAQ: "Does Grameen Bank make profits?
Since its inception, Grameen Bank made profits every year, except for the years 1983, 1991 and 1992. For detailed information take a look at the Data & Reports section."
The fact is, the only way you would know that your business is serving people is if it makes a profit. Loss-making enterprises mean that there are better uses for your capital.
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the only way you would know that your business is serving people is if it makes a profit.
Obviously and demonstrably false. And the profits from the business goes back to the people it serves. The Grameen bank does not use its profits to enrich its owners at the expense of the poor. It does not seek to maximize shareholder value above all else. It's a matter of recognizing that a business exists for something MORE than just making a profit. Money should not be the end goal. If you don't get this, keep
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The fact is, the only way you would know that your business is serving people is if it makes a profit. Loss-making enterprises mean that there are better uses for your capital.
That's an awfully circular sounding definition.
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That's not true. You could lose a lot of money shipping food to starving people in Africa. The notion that the lack of profit there means there are better uses for your capital is ridiculously capitalism-centric thinking.
Re:What about Google? (Score:4, Insightful)
Re:What about Google? (Score:5, Insightful)
Re:What about Google? (Score:4, Insightful)
So when you grow a garden, you only grow exactly how much food you need to eat an no more, because producing extra profit is evil right?
Nobody said that.
You seem to not understand what capitalism and free markets are.
Too easy, I'll pass.
You're leaving out the part that says anyone, regardless of class, race, sex, or anything can, if they choose, pursue as much profit as they wish. You don't even have to work if you don't want to. You can choose to sit on a corner and beg like a lot of people do. Capitalism and free markets are essential to freedom.
This is where my BS meter went into the red. This would be true ONLY in a condition of true equality, which condition cannot exist in the real world. In the real world, a noticeable percentage of people lie, cheat, steal, commit violence against each other, discriminate unfairly against people who look, sound, or act different from themselves, and generally are complete bastards whenever they think they can get away with it.
This is why idealistic ideology falls apart in the face of actual events, whether it's capitalism, communism, libertarianism, or benign authoritarianism. All of these theoretical ideals offer important insights, and should be pursued, but should be recognized as measurements, not goals. The human experiment thus far tends to suggest that a balance of competing ideals is the most workable solution. We must learn to recognize that going too far in ANY direction causes more problems than it solves.
Luckily, most of humanity realizes this, and acts accordingly, with local variations and frequent missteps. You know this, yourself, as you proceed to demonstrate:
When government takes my work away from me in the form of taxes and uses it for schools, police, or fire departments, I don't really mind. It beats going out and actually helping build a road myself. Instead of working on a sewer system, I can do other work that I freely choose to do and trade that work in the form of money for a sewer system. Everyone benefits, including me, and I get something in exchange for my work.
Aha! So, what you are saying, I think, is that in some cases the collective good outweighs personal freedom and absolute capitalism. An interesting twist of phrasing, working "freely choose" in there. But an essential recognition of truth at some level.
Under socialism, when government takes my money and gives it to another person without giving me anything in return, that is no different than forcing me to work for that person for free, getting nothing in return. That is the very definition of slavery.
Oh dear, now you contradict yourself. If your house does not catch fire, was your tax money wasted on the fire department? Please step away from the loaded words for a moment. Notice that, sans the "S" word, you just described the same situation as your previous statement, only this time instead of "freely choose" we have "Socialism" (shudder).
Newsflash: Collective action, in the form of taxation and government services, OF ANY KIND, is a form of "Socialism". Here's a useful set of definitions. See especially definition number one. [merriam-webster.com]
So, your defense system, court system, fire service, police service, border guards, etc. etc. are all part of the socialist side of the balance scales, along with the usual "evil socialism" suspects of public financial assistance and health care. It's amusing, in a "makes me want to vomit" sort of way, to hear otherwise generally intelligent people decry one sort of socialism while practically worshiping another sort.
Unfortunately, there are lots of people out there who believe slavery is superior to freedom.
More unfortunately, there are far too many people out there who believe in a fantasy world where you get to, or
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Google is not an 'open source company', although they do have open source products. Even Microsoft has open source initiatives (granted theirs is rather pitiful), as does Apple (apple tends to release far more to the open source community and open standards of the two however). Google get's it's revenue from web ads, and unless they open the source code and algorithms for the web their proprietary web search, they are not an Open Source company. Projects like Chrome, and Android don't make them any money.
"B
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>- Open Source is (relatively) new
For cereal? GCC is 23 years old at this point. DJGPP (Dos port of GCC) is 21 years old. The Apache webserver came out in 1995. Perl came out years before in 1987. I'm sure i could go on.
What I meant is that "'selling' OSS is a new thing". As such, the business model is not still 100% set. Wow, I didn't know DJGPP was that old !
>- Open Source is not tame. It's not easy to use (as even Windows tried to be - and sucked - at the beginning) Remember Windows NT?!
This is a crappy analogy. Some of the shit is definitely difficult (sendmail, weirder nagios configs). But if you can't figure out how to set up an basic Apache install, I'm sorry, you're kind of retarded. Anyhow, "easy to use" is not respective of quality.
I don't mean Apache really, but yeah, sendmail, qmail, etc, etc. And even sometimes "too easy to use" is complicated, see IIS 6
>- It's hard to sell OSS. IMHO Red Hat did it the best, but see other companies. Novell got mixed results, the others, well...
You obviously have no idea what you're fucking talking about at this point.
Maybe, do you know people that work for RedHat, Mandriva and Novell as I do?! Do you know their customers, how they work, etc, etc?!
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Wouldn't it be smarter to bet your friend a million pounds that he'd become a billionaire before you? That way, either way, you win -- if you become a billionaire first you need merely pay off a small bet; if he becomes a billionaire first, you become a millionaire.
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